Paul Krugman sounds frustrated. “You tend to think,” he told last month’s Netroots Nation conference, “that people who are demanding that we solve this [depression] quickly must be crazy idealists who are defying the wisdom of economic knowledge. But it’s actually the other way around. It’s actually the people in charge, who are refusing to end this thing quickly, who are ignoring the lessons of history and rejecting economic knowledge.”
Krugman’s consternation is easy to understand. While mainstream reporters rank gaffes and mainstream politicians demagogue the deficit, hard realities loom, against which elite discourse seems almost innocent. A rolling world economic crisis could easily lead to a Second Great Depression. The ongoing decline of middle-class wealth and income is steadily transforming the United States. The euro project and the European social welfare state both face collapse. Disorder spreads in the Middle East. China’s high-savings economic model breeds twin political and economic crises that could shake geo-economics for decades. And the thirty-year build-up of private-public debt in the Western world will require extraordinary measures to keep it from bringing down the global economy.
But as our political system (bailouts for bankers aside) proves congenitally resistant to extraordinary measures, our elites (right-wing revolutionaries aside) shrink from even proposing them. Nowhere is elite failure clearer than in economics, a profession whose rightward drift proceeded undisturbed even after a toxic mix of neoclassical and neoliberal models crashed economies and dashed hopes for millions.
Once upon a time, Richard Nixon declared himself a Keynesian. But these days, Mitt Romney can make news just by momentarily acknowledging that deep cuts slow growth—common sense that even our Democratic president often seems loathe to utter. It too often seems, to quote Yeats, that “the best lack all conviction, while the worst are full of passionate intensity.”
That’s what makes a new document, from Krugman and fellow economist Richard Layard, such a welcome and urgent breath of fresh air (Layard is the founder of the Centre for Economic Performance at the London School of Economics). Their work—“A manifesto for economic sense”—is by no means radical. But it’s rational, which these days is saying a lot.
Krugman’s credentials are second to none, and need no repetition. And yet he and fellow Nobel laureate Joseph Stiglitz may be, as Robert Kuttner argued recently at The American Prospect, “our most widely ignored public intellectuals.” I’d add former Labor Secretary Robert Reich to that list as well. Krugman recounted to the Netroots crowd how he, Stiglitz, and Reich pushed for more aggressive action early in the Obama presidency, but “we lost those arguments. Maybe it was the beards.” More seriously, Krugman said that “the ‘Very Serious People,’ the ones who must know what they’re doing because they’re so rich, even in an Obama White House came across as having the answers.” Since then, Krugman believes Obama has shifted, but with a GOP set on sabotage and a Federal Reserve fixated on phantom inflation, it may be too little, too late.